posted 23 Jan 2003 in Volume 6 Issue 5
Ideas for innovation
A company’s ability to compete stems from its ability to innovate, and as the traditional hub of idea generation in most businesses, it is often to the R&D department that this responsibility falls. Boris Pluskowski describes how Grace Performance Chemicals is working to harness the ideas generated by its employees in a bid to establish a culture conducive to innovation across the firm as a whole.
When the global economy took a turn for the worse, the immediate reaction for most companies was to reduce costs – a customary quick-fix that firms have traditionally relied upon to deal with short-term problems. But as the economy continues to decline and companies continue to trim the corporate ‘fat’, executives are realising that the key to survival and prosperity can no longer be found in productivity alone. Businesses that want to succeed also need to grow: not necessarily in size or headcount but in profitability, and product range and complexity. Indeed, a company’s ability to compete, now more than ever, lies in its ability to innovate. In a market in which consumers are very selective in what they buy, customers are demanding that businesses compete with either low product cost or high product differentiation. The low-cost option is a treacherous path that very few tread successfully, while the high-differentiation route is similarly challenging. The demand for new products and services has never been greater, and as the traditional stewards of innovation and invention in companies, R&D departments are being asked to overcome the challenge at hand.
Knowledge management is in a unique position to be able to help. With limited resources, companies need to be able to maximise whatever assets they have available to them – including the combined intellect of their employees, customers and suppliers. By initially focusing on the application of dynamic aspects of their KM systems (see also my previous article in Knowledge Management entitled ‘Dynamic knowledge systems: achieving real ROI from KM technologies’ published in May 2002), R&D departments such as that of Grace Performance Chemicals are tapping into their knowledge resources to innovate and invent in new and unusual ways that, they hope, will give them the edge over their competitors.
Grace Performance Chemicals is a global division of WR Grace & Co, one of the world’s premier specialty chemicals and materials companies. The focus of the division is on the invention and manufacture of products to improve the performance, durability and cost of buildings and infrastructure (concrete admixtures, cement additives, masonry products, waterproofing systems and fire-protection products), and for the food and beverage packaging sectors (coating, can sealants and closure systems). Grace’s core businesses are growing and are already leaders in many of the markets they serve. However, in order to maintain these positions, they need to increase their growth rate and improve their ability to identify further growth opportunities.
The challenge to innovate
The challenge for Grace is to try and improve upon its existing capability to generate new products, services and business processes. The key is to ensure the organisation is able to access the richest set of ideas possible and enable the most promising projects to move forward. Grace already had the organisational capabilities and processes in place to execute and bring projects to fruition. However, the company needed to enhance its methodologies and approaches to identifying and developing new ideas to feed the project pipeline. As such, Grace saw innovation as a vital process in enriching the stream of ideas that would enable the firm’s future capabilities.
The company identified two critical issues that needed to be addressed: finding and selecting the best ideas (and continuing to build on these ideas in their transition to becoming full-scale projects), and then, once they had a group of ideas, prioritising and managing them as opportunities. The entire process encompasses several aspects of idea management, opportunity management and other innovation-management techniques. However, it can be broken down into three key steps:
- Decide upon and understand the areas the company will explore;
- Generate, organise and develop ideas in those areas;
- Identify the right opportunities and execute them.
‘The innovation path’, the name given to this process by Grace, was created as a joint effort between marketing, R&D and Grace’s newly formed innovation group. The term was chosen to represent a roadmap that could be used to view and guide progress, rather than a formal, rigid methodology.
Grace’s innovation director oversees this new capability. Reporting directly to the VP of new business development, this position was created to monitor, explore and facilitate the company’s innovation efforts. The firm’s executives, who are the driving force behind the initiative, define innovation as ‘the adopted change that results from recognised needs and solutions’. The innovation group therefore works across the entire spectrum of activities, all the way from idea generation through to opportunity implementation.
As part of the toolset identified to support the innovation-path initiative, Grace installed Imaginatik’s Idea Central idea-management system. So far, since implementing the system in late 2002, Grace has run four idea campaigns, including two pilots. These have yielded over 250 ideas from 120 people (out of around 300 invited participants), several of which have already been implemented. Many more are currently in the evaluation process.
Many of the early campaign topics centred on finding out how best to structure the innovation process within Grace and how best to optimise the organisation’s use of the system. For example, one winning idea from the pilot campaign suggested that a newly launched campaign contain several ‘seed’ ideas to get the creative juices flowing and to overcome the potential barrier of being the first to submit an idea.
Another idea was to develop an executable icon to put on everyone’s desktop to make the application even easier to access and submit ideas to (the application is normally accessible via the corporate intranet). Other ideas suggested how to frame the campaigns and how best to issue the ‘challenges’ (documents designed to stimulate and focus the innovation process within a campaign or event, taking into the account the KM adage that people frequently don’t know what they know until they need to know it).
Grace recently ran a campaign that looked at the decision makers involved in buying a product. The campaign was focused on finding ways to encourage those decision makers to engage more in the specification stages of product development so as to encourage greater use of the product. This campaign reached out across the company with extensive involvement from the marketing and sales divisions. The geographic distribution of sales staff made this a hard group to gather knowledge and insights from using other methods. On the other hand, their regular interactions with decision makers at all levels made their involvement in this process essential. The ‘Idea Garden’, as the firm’s idea-management environment is called, made this possible by providing a channel for stimulating and collecting that knowledge in a secure and efficient manner. Another campaign is currently looking at extending the range of the firm’s products by looking at how those products are being used in certain markets, and exploring the various modifications that could extend their use into new markets.
Grace has found that the type of ideas that are put forward depends to a large degree on the topic being addressed. Marketing challenges for example, tend to elicit very broad ideas, frequently in need of significant development. Product campaigns, on the other hand, usually prompt more detailed ideas that have already undergone a lot of thought and fleshing out prior to submission.
The company has also noticed that certain individuals have a high propensity to submit a large number of good ideas on almost any topic. The firm identified these people by analysing previous campaigns to see who the best contributors were. There seems to be no pattern as to where these people are located in the business: Grace has so far uncovered employees in R&D, production and various product groups who have all demonstrated a high level of participation. This group (which is being added to constantly as new candidates are found) is now invited to almost all of Grace’s idea campaigns. Participation in events by the group is entirely voluntary and without need of approval from participants’ managers in recognition that, in an innovation culture, permission to innovate shouldn’t be necessary.
More recent campaigns have tended to follow strong strategic themes that are decided upon and prioritised by a cross-functional group that includes representatives from all areas of the business, including marketing, R&D and operations, along with the director of innovation. One of the more advanced groups within Grace has gone further by forming formal committees to generate potential campaign topics that are reviewed on a monthly basis. Soon, each of the Grace businesses will have its ‘idea portfolio’ analysed by one of these committees, which will seek to identify areas that might be facing potential shortfalls in ideas. By focusing future campaigns to address these shortfall areas, the problem can be addressed.
A culture conducive to innovation
As with all KM initiatives, there is a certain amount of success that has to be attributed to the culture of the company using the process. Grace is doing everything possible to ensure that employees see and feel that innovation and creativity are valued by the organisation. Appropriate forms of recognition and rewards for ideas generated are used to further drive innovation into the corporate culture, and employees can see that their ideas are being implemented.
There are three factors that Grace believes are essential to getting the innovation culture just right:
- Rewards and recognition – Grace gives participants in the innovation process several different forms of reward to demonstrate the firm’s appreciation of their contributions. The firm has specifically avoided using financial or other disproportionately large awards because they wanted to continue to foster an open, sharing environment. Financially motivated groups will instead have a more competitive nature, hoarding ideas rather than sharing them, in turn creating a closed culture. Grace realised that ideas frequently need to go through a ‘building’ stage in order to get them to a point where they can be implemented. That building stage requires a highly collaborative and co-operative environment in order to be effective;
- Aligning the organisation’s goals with the needs of the individual – when driving change, goals that are shared by both the organisation and the individual are the ones that are most likely to be realised. The same applies to driving innovation into the corporate culture. It is not enough to simply state a desire to create a rich stream of ideas; the corporation needs to make sure that individuals feel safe enough to be creative and that their ideas are being valued by the organisation;
- Consistent theme – it’s important to make sure that innovation is a part of everyday communication. Making innovation a recurring theme with consistently stated goals makes the commitment to innovation more of a reality and makes that commitment more likely to be absorbed by employees.
Although it is too early to measure the tangible results of the campaigns, Grace’s initial analysis of the ideas the firm has collected suggests substantial material benefit from the company’s use of the process. There has also been a positive response from participants – most seem to appreciate having an outlet through which they can direct their creative energies. Although participants know that only a fraction of all submitted ideas will be implemented, they are motivated by the knowledge that their ideas will be read and evaluated, and that their efforts will be recognised and rewarded.
Going forward with knowledge management
Although innovation activities at Grace are not explicitly labelled as KM, Grace is aware of the close association between the two and is looking to implement other KM activities with the aim of finding ways to capitalise on the collaborative energy the firm’s innovation activities are generating. The company is already building a set of databases to capture the collective knowledge of sections of the R&D department and is looking at methods for ensuring that, as people come and go through the lab, knowledge is created only once and resides in a single central location where it can be mined at a later date.
The company realises that it is still at an early stage of its innovation journey, and that many challenges lie ahead. High on the list is the need to further unlock the company’s creativity, as well as ensuring that the firm is efficiently focusing and capturing that creativity and executing the results in the right way.
Keeping a consistent set of metrics for ROI calculations is another challenge. Leading metrics such as the number of campaigns run, the number of campaigns planned, the number of ideas generated and so on are easy to monitor. Trailing metrics – revenue generated, savings achieved, etc – are much harder to come by. These figures obviously take time to materialise, and different campaigns will generate different types of results, which make a consistent approach very difficult to formulate. For the moment, Grace is using full metrics only on a few specific campaigns, taking it on faith that the majority are being effective and are positively changing the organisation and its way of doing business, although further work is being done in this area.
So far, new product development has been the main area of focus for Grace’s innovation initiatives, as this area has been the traditional source of growth for the firm. Getting it right in this area means making the best ideas available to the company as a whole. However, the opportunity for innovation across the entire organisation hasn’t been ignored, and future campaigns are already being planned to move innovation beyond R&D and into other sectors of the business.
This in turn reflects Grace’s beliefs that only a portion of potential opportunities to improve the company’s business can come from the R&D division. Corporate innovation is as much about marketing and knowing where a specific solution fits as it is about finding that solution. Indeed, locating where a given solution has value is frequently harder than finding the solution itself.
Many thanks to the Innovation Group at Grace Performance Chemicals for the interviews on which this article was based.
Boris Pluskowski is managing editor of Imaginatik Research’s Corporate Innovation. He can be contacted at firstname.lastname@example.org